Security Bank to merge with Federal Savings Bank

Security Bank Corp. (SBC) announced yesterday that it would acquire 100 percent of Federal Savings and Mortgage Bank.

SBC assistant corporate secretary Lourdes Crisostomo said the SBC Board approved yesterday the said merger in a special meeting.

The merger plan, Crisostomo said, would be subject to approval by the shareholders of Security Bank scheduled to be held this coming May 30. After the approval of the shareholders, the merger plan will be submitted to the Securities and Exchange Commission (SEC) and the Bangko Sentral ng Pilipinas.

SBC corporate planning head Melissa Aquino told The STAR that the combined entity will have an aggregate assets of P59.55 billion. SBC's assets stood at P59 billion while Federal Savings has P550 million in total resources.

SBC has 125 branches and a capital of P7.8 billion while Federal has three branches and capital of P500 million.

Federal Savings is owned by Henry Go, who has interest in real estate and cargo handling business. Go is the chairman of People's Asia Cargo located at the newly-built Ninoy Aquino International Airport 3.

SBC, a medium-sized universal bank, is owned by the Dee family (38 percent) , Taiwanese partners (18 percent); Philip Ang (13 percent) and the Social Security System (12 percent).

Aquino said negotiations for the merger of the two banks started only early this year. "We saw the potential of Federal Savings. We can use their existing infrastructure and system. We can also pursue offering their retail products," Aquino said.

Federal Savings, she said, is basically a new bank established two years ago after the Asian financial crisis in 1997. Its branches are located in Makati (where its headquarter is located), Laguna and Novaliches.

The SBC official said they decided to buy Federal Savings Bank because its balance sheet is clean. "The savings bank is very new and its book are clean," she said.

Aside from this, she said they want to take advantage of the incentives given to merging banks by the BSP.

The BSP has been encouraging banks to merge to strengthen their position in the banking industry. After Equitable Bank bought PCIBank, BPI followed by acquiring majority stake of Far East Bank and Trust Co. Recently, Metropolitan Bank and Trust Co. bought Asian Banking Corp. and Solid Banking Corp.

Other big banks that have yet to acquire or merge include Henry Sy's Banco De Oro, China Banking Corp. of the Dy family, Rizal Commercial Banking Corp. of the Yuchengco's and Union Bank of the Aboitiz Group.